Attached files
| file | filename |
|---|---|
| 8-K/A - MODINE MANUFACTURING COMPANY 8-KA 11-30-2016 - MODINE MANUFACTURING CO | form8ka.htm |
| EX-99.2 - EXHIBIT 99.2 - MODINE MANUFACTURING CO | ex99_2.htm |
| EX-23 - EXHIBIT 23 - MODINE MANUFACTURING CO | ex23.htm |
| EX-99.4 - EXHIBIT 99.4 - MODINE MANUFACTURING CO | ex99_4.htm |
Exhibit 99.3
HTS GROUP - Division of Luvata Oy Group
Combined Interim Financial Report January-September 2016 (IFRS)
|
Combined statement of comprehensive income
|
2
|
|
Combined statement of financial position
|
3
|
|
Combined statement of cash flows
|
5
|
|
Notes to the combined interim financial report
|
6
|
1
HTS Group - Division of Luvata Oy Group
Combined statement of comprehensive income (IFRS)
|
€ million
|
Note
|
Jan 1 - Sep 30,
2016
|
Jan 1 - Sep 30,
2015
|
|||||||||
|
Sales
|
386.8
|
379.9
|
||||||||||
|
Cost of sales
|
(314.5
|
)
|
(305.9
|
)
|
||||||||
|
Gross profit
|
72.3
|
73.9
|
||||||||||
|
Selling and marketing expenses
|
(13.8
|
)
|
(13.3
|
)
|
||||||||
|
Administrative expenses
|
(21.0
|
)
|
(20.6
|
)
|
||||||||
|
Research and development expenses
|
(2.4
|
)
|
(1.9
|
)
|
||||||||
|
Other operating income
|
1.3
|
0.7
|
||||||||||
|
Other operating expenses
|
(2.6
|
)
|
(2.6
|
)
|
||||||||
|
Operating profit (loss)
|
33.8
|
36.2
|
||||||||||
|
Financial income
|
0.2
|
0.2
|
||||||||||
|
Financial expenses
|
(17.7
|
)
|
(21.4
|
)
|
||||||||
|
Profit (loss) before taxes
|
16.3
|
15.0
|
||||||||||
|
Income taxes
|
4
|
(6.6
|
)
|
(7.2
|
)
|
|||||||
|
Profit (loss) for the period
|
9.7
|
7.8
|
||||||||||
|
Other comprehensive income
|
||||||||||||
|
Items that will never be reclassified to profit or loss
|
||||||||||||
|
Remeasurements of defined benefit liability (asset)
|
(1.2
|
)
|
(0.1
|
)
|
||||||||
|
Related tax
|
0.4
|
0.0
|
||||||||||
|
(0.8
|
)
|
(0.1
|
)
|
|||||||||
|
Items that are or may be reclassified to profit and loss
|
||||||||||||
|
Foreign currency translation differences for foreign operations
|
5
|
(4.3
|
)
|
7.5
|
||||||||
|
(4.3
|
)
|
7.5
|
||||||||||
|
Other comprehensive income, net of tax
|
(5.1
|
)
|
7.4
|
|||||||||
|
Total comprehensive income for the period attributable to owners of the company
|
4.6
|
15.2
|
||||||||||
The notes form an integral part of the combined interim statements
2
HTS Group - Division of Luvata Oy Group
Combined statement of financial position (IFRS)
|
€ million
|
Note
|
At Sep 30,
2016
|
At Dec 31,
2015
|
|||||||||
|
ASSETS
|
||||||||||||
|
Non-current assets
|
||||||||||||
|
Property, plant and equipment
|
6
|
78.9
|
82.6
|
|||||||||
|
Intangible assets
|
1.9
|
1.9
|
||||||||||
|
Goodwill
|
200.8
|
202.6
|
||||||||||
|
Deferred tax assets
|
7.7
|
7.3
|
||||||||||
|
Other long-term assets
|
0.3
|
0.4
|
||||||||||
|
Total non-current assets
|
289.7
|
294.7
|
||||||||||
|
Current assets
|
||||||||||||
|
Inventories
|
41.1
|
42.9
|
||||||||||
|
Trade and other receivables
|
90.9
|
74.3
|
||||||||||
|
Loan and other financial receivables from former parent HTS II AB
|
7,8
|
137.0
|
145.3
|
|||||||||
|
Current tax assets
|
2.9
|
3.6
|
||||||||||
|
Derivative financial instruments
|
8
|
0.2
|
0.1
|
|||||||||
|
Cash and cash equivalents
|
8
|
17.0
|
12.0
|
|||||||||
|
Total current assets
|
289.0
|
278.4
|
||||||||||
|
TOTAL ASSETS
|
578.7
|
573.1
|
||||||||||
The notes form an integral part of the combined interim statements
3
HTS Group - Division of Luvata Oy Group
Combined statement of financial position (IFRS)
|
€ million
|
Note
|
At Sep 30,
2016
|
At Dec 31,
2015
|
|||||||||
|
EQUITY AND LIABILITIES
|
||||||||||||
|
Net parent investment
|
9
|
115.1
|
109.8
|
|||||||||
|
Non-current liabilities
|
||||||||||||
|
Long-term debt due to former parent HTS II AB
|
7,8
|
-
|
239.6
|
|||||||||
|
Deferred tax liabilities
|
11.1
|
11.2
|
||||||||||
|
Pension obligations
|
15.6
|
14.7
|
||||||||||
|
Provisions
|
1.4
|
1.5
|
||||||||||
|
Other long-term liabilities
|
0.4
|
0.6
|
||||||||||
|
Total non-current liabilities
|
28.5
|
267.6
|
||||||||||
|
Current liabilities
|
||||||||||||
|
Trade and other payables
|
100.2
|
87.7
|
||||||||||
|
Current debt due to former parent HTS II AB
|
7,8
|
323.6
|
97.8
|
|||||||||
|
Current debt from financial institutions
|
8
|
1.1
|
1.4
|
|||||||||
|
Current tax liabilities
|
6.4
|
6.3
|
||||||||||
|
Derivative financial instruments
|
8
|
0.4
|
0.7
|
|||||||||
|
Provisions
|
3.5
|
1.7
|
||||||||||
|
Total current liabilities
|
435.1
|
195.7
|
||||||||||
|
TOTAL EQUITY AND LIABILITIES
|
578.7
|
573.1
|
||||||||||
The notes form an integral part of the combined interim statements
4
HTS Group - Division of Luvata Oy Group
Combined statement of cash flows (IFRS)
|
€ million
|
Jan 1 - Sep 30,
2016
|
Jan 1 - Sep 30,
2015
|
||||||
|
Cash flow from operating activities
|
||||||||
|
Net profit for the financial year
|
9.7
|
7.8
|
||||||
|
Adjustments for
|
||||||||
|
Taxes
|
6.6
|
7.2
|
||||||
|
Depreciation
|
7.8
|
7.6
|
||||||
|
Finance income and expenses
|
17.6
|
21.2
|
||||||
|
Other adjustments
|
(0.1
|
)
|
0.1
|
|||||
| 32.0 | 36.1 | |||||||
|
Change in working capital
|
||||||||
|
Change in trade and other receivables
|
(17.5
|
)
|
(0.7
|
)
|
||||
|
Change in inventories
|
1.0
|
(2.0
|
)
|
|||||
|
Change in trade and other payables
|
13.3
|
(4.2
|
)
|
|||||
|
(3.1
|
)
|
(7.0
|
)
|
|||||
|
Interest received
|
0.2
|
0.2
|
||||||
|
Interest and finance expenses paid
|
(3.3
|
)
|
(1.8
|
)
|
||||
|
Income tax paid
|
(6.1
|
)
|
(11.5
|
)
|
||||
|
Net cash generated from operating activities
|
29.3
|
23.7
|
||||||
|
Cash flow from investing activities
|
||||||||
|
Purchases of tangible and intangible assets
|
(6.4
|
)
|
(4.5
|
)
|
||||
|
Proceeds from sale of tangible and intangible assets
|
0.1
|
0.1
|
||||||
|
Change in other long-term receivables
|
0.0
|
0.0
|
||||||
|
Net cash used in investing activities
|
(6.3
|
)
|
(4.4
|
)
|
||||
|
Cash flow from financing activities
|
||||||||
|
Borrowings of long-term debt from former parent HTS II AB
|
1.5
|
0.0
|
||||||
|
Repayments of long-term debt to former parent HTS II AB
|
(1.8
|
)
|
(14.0
|
)
|
||||
|
Change in cash pool balances from former parent HTS II AB
|
(42.3
|
)
|
(14.7
|
)
|
||||
|
Change in current debt from financial institutions
|
(0.3
|
)
|
0.7
|
|||||
|
Proceeds from capital injections from former parent HTS II AB
|
24.7
|
13.5
|
||||||
|
Change in deposits at brokers
|
0.4
|
0.2
|
||||||
|
Other financing cash flow
|
0.0
|
(0.0
|
)
|
|||||
|
Net cash used in financing activities
|
(17.8
|
)
|
(14.3
|
)
|
||||
|
Net change in cash and cash equivalents
|
5.2
|
5.1
|
||||||
|
Cash and cash equivalents at the beginning of the financial year
|
12.0
|
10.2
|
||||||
|
Foreign exchange rate effect on cash and cash equivalents
|
(0.2
|
)
|
0.2
|
|||||
|
Cash and cash equivalents at the end of the reporting date
|
17.0
|
15.5
|
||||||
The notes form an integral part of the combined interim statements
5
HTS Group - Division of Luvata Oy Group
Notes to the combined interim financial report January - September 2016
1. Company information
On September 6, 2016 Modine Manufacturing Company (Modine) entered into agreement with Luvata Heat Transfer Solutions II AB (HTS II AB) for the acquisition of 100% of the shares of all operating and holding companies held by HTS II AB. Previously, these entities were consolidated to Luvata Oy’s consolidated financial statements and formed an operational division of Luvata Oy Group (later referred to as Luvata Group). The acquisition was completed on November 30, 2016.
The combined interim financial statements are prepared as a combination of all the legal companies sold in the transaction. These legal entities included in the combined interim financial statements are later referred to as the Heat Transfer Solutions Group (HTS Group).
HTS Group manufactures commercial and industrial coils, cooler units, coatings and custom designed solutions for applications including refrigeration, climate control, process cooling, power generation and data-center cooling.
2. Basis of preparation
The combined interim financial statements have been prepared for the purpose of the acquirer's Current Report on Form 8-K/A filed with the Securities and Exchange Commission and illustratively present the historical financial information of the acquired operations and may not reflect the situation had the financial statements been prepared on a consolidated standalone basis. The combined interim financial statements were authorized for issuance by those charged with governance on February 14, 2017.
This combined interim report is unaudited and prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies and methods of computation have been followed when preparing the interim financial information as in the Combined Financial Statements 2014 - 2015. Please see the Combined Financial Statements 2014 - 2015 for detailed accounting policies and comprehensive notes information.
HTS Group has applied the following amended standards that have come into effect for financial years beginning on or after 1 January 2016:
| - |
Annual Improvements to IFRSs (2012-2014 cycle): The annual improvements process provides a mechanism for minor and non-urgent amendments to IFRSs to be grouped together and issued in one package annually. The cycle contains amendments to four standards. Their impacts vary standard by standard but are not significant.
|
| - |
Amendment to IAS 1 Presentation of Financial Statements: Disclosure Initiative. The amendments clarify the guidance in IAS 1 in relation to applying the materiality concept, disaggregating line items in the balance sheet and in the statement of profit or loss, presenting subtotals and to the structure and accounting policies in the financial statement. The amendments have had a minor impact on presentation of HTS Group combined financials.
|
Other amendments have had no impact on HTS Group combined interim financials.
3. Managements’ judgment and the use of estimates
Preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of income and expenses during the reporting period. Although these estimates are based on management’s best knowledge of events and actions at time of preparation of financial statements, actual results may differ from estimates.
6
HTS Group - Division of Luvata Oy Group
Notes to the combined interim financial report January - September 2016
4. Income taxes
|
€ million
|
Jan 1 - Sep 30,
2016 |
Jan 1 - Sep 30,
2015 |
||||||
|
Current year tax expense
|
(6.9
|
)
|
(7.8
|
)
|
||||
|
Prior years tax expense
|
(0.0
|
)
|
(0.1
|
)
|
||||
|
Deferred taxes
|
0.3
|
0.6
|
||||||
|
Total income taxes
|
(6.6
|
)
|
(7.2
|
)
|
||||
Income taxes by country
|
€ million
|
Jan 1 - Sep 30,
2016 |
Jan 1 - Sep 30,
2015 |
||||||
|
US
|
(3.3
|
)
|
(5.2
|
)
|
||||
|
Italy
|
(1.7
|
)
|
(1.1
|
)
|
||||
|
Other countries
|
(1.7
|
)
|
(0.9
|
)
|
||||
|
Total income taxes
|
(6.6
|
)
|
(7.2
|
)
|
||||
5. Foreign currency translation differences
Foreign currency translation differences arise from the translation of financial statements of foreign operations. The main functional currencies within HTS Group entities are USD, CNY and SEK; USD being the most significant currency causing translation differences.
6. Property, plant and equipment
|
€ million
|
2016
|
2015
|
||||||
|
Carrying value at Jan 1
|
82.6
|
82.1
|
||||||
|
Additions
|
5.2
|
4.0
|
||||||
|
Disposals
|
(0.0
|
)
|
(0.1
|
)
|
||||
|
Translation differences
|
(1.2
|
)
|
2.2
|
|||||
|
Depreciation
|
(7.6
|
)
|
(7.4
|
)
|
||||
|
Carrying value at Sep 30
|
78.9
|
80.8
|
||||||
7. Related party transactions
Employee benefits paid to key management of Luvata Group and HTS Group
|
€ million
|
Jan 1 - Sep 30,
2016 |
Jan 1 - Sep 30,
2015 |
||||||
|
Short-term employee benefits
|
2.5
|
2.4
|
||||||
|
Termination benefits
|
0.0
|
-
|
||||||
|
Total compensation
|
2.5
|
2.4
|
||||||
7
HTS Group - Division of Luvata Oy Group
Notes to the combined interim financial report January - September 2016
Transactions and balances with Other Luvata Group companies
|
€ million
|
Jan 1 - Sep 30,
2016 |
Jan 1 - Sep 30,
2015 |
||||||
|
Sales of services
|
0.9
|
0.9
|
||||||
|
Raw material purchases
|
(30.8
|
)
|
(35.9
|
)
|
||||
|
Other expenses
|
(3.0
|
)
|
(3.5
|
)
|
||||
|
Derivative transactions
|
(0.8
|
)
|
(0.2
|
)
|
||||
|
Interest expenses and other financial items
|
(17.1
|
)
|
(20.8
|
)
|
||||
|
€ million
|
At Sep 30,
2016 |
At Dec 31,
2015 |
||||||
|
Cash pool receivables from and deposits to HTS II AB
|
137.0
|
120.7
|
||||||
|
Receivables on equity issues from HTS II AB
|
-
|
24.7
|
||||||
|
Trade and other current receivables
|
0.7
|
2.3
|
||||||
|
Long-term loans due to HTS II AB
|
-
|
239.6
|
||||||
|
Current loans due to HTS II AB
|
323.6
|
97.8
|
||||||
|
Accrued interest expenses due to HTS II AB
|
6.7
|
2.6
|
||||||
|
Trade and other current payables
|
8.5
|
9.1
|
||||||
As shown in the above table, long-term debt due to former parent company HTS II AB was classified as short-term at September 30, 2016 due to signing of the Share sale and Purchase Agreement (SPA) between HTS II AB and Modine on September 6, 2016 resulting into settlement of inter-company loans before closing of the transaction.
8
HTS Group - Division of Luvata Oy Group
Notes to the combined interim financial report January - September 2016
8. Financial instruments
The carrying values and fair values of HTS Group’s financial instruments are presented in the table below:
|
At Sep 30,
2016
|
At Dec 31,
2015
|
|||||||||||||||
|
€ million
|
Carrying
value
|
Fair
value
|
Carrying
value
|
Fair
value
|
||||||||||||
|
Investments and receivables
|
||||||||||||||||
|
Current loans receivable 2)
|
137.0
|
137.0
|
120.7
|
120.7
|
||||||||||||
|
Cash and marketable securities 2)
|
17.0
|
17.0
|
12.0
|
12.0
|
||||||||||||
|
Debt
|
||||||||||||||||
|
Long-term debt 2)
|
-
|
-
|
(239.6
|
)
|
(239.6
|
)
|
||||||||||
|
Current debt 2)
|
(324.7
|
)
|
(324.7
|
)
|
(99.2
|
)
|
(99.2
|
)
|
||||||||
|
Financial derivatives 1)
|
||||||||||||||||
|
Forward foreign exchange contracts 3)
|
(0.4
|
)
|
(0.4
|
)
|
0.1
|
0.1
|
||||||||||
|
Metal derivatives 1)
|
||||||||||||||||
|
Forward and futures copper contracts 3)
|
0.1
|
0.1
|
(0.6
|
)
|
(0.6
|
)
|
||||||||||
|
Forward and futures aluminium contracts 3)
|
0.1
|
0.1
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||
1) Derivative transactions have been made for hedging purposes. The market value of derivatives indicates potential result of these transactions assuming the deals were closed at the date of the balance sheet. The carrying amount of forward foreign exchange contracts and currency swaps include unrealised gains and losses relating to hedges of firm and anticipated commitments which have been booked to income statement.
Measurement Category
2) Loans and receivables, fair value level 2
3) Derivative contracts, Financial assets/liabilities at fair value through income statement, fair value level 2
9. Net parent investment
The movement of total net parent investment is presented in the table below:
|
€ million
|
||||
|
Net parent investment at Dec 31, 2014
|
112.0
|
|||
|
Profit (loss)
|
(49.3
|
)
|
||
|
Foreign currency translation differences for foreign operations
|
11.2
|
|||
|
Remeasurements of defined benefit liability (with related tax)
|
0.2
|
|||
|
Total comprehensive income (loss) for the period
|
(37.9
|
)
|
||
|
Transactions with owners, recorded directly in equity:
|
||||
|
Capital injections converted from loans
|
8.5
|
|||
|
Capital injections paid in cash
|
2.5
|
|||
|
Capital injections to be paid in cash (payment in 2016)
|
24.7
|
|||
|
Total contributions by and distributions to owners
|
35.7
|
|||
|
Net parent investment at Dec 31, 2015
|
109.8
|
|||
9
HTS Group - Division of Luvata Oy Group
Notes to the combined interim financial report January - September 2016
|
€ million
|
||||
|
Net parent investment at Jan 1, 2016
|
109.8
|
|||
|
Profit (loss)
|
9.7
|
|||
|
Foreign currency translation differences for foreign operations
|
(4.3
|
)
|
||
|
Remeasurements of defined benefit liability (with related tax)
|
(0.8
|
)
|
||
|
Total comprehensive income for the period
|
4.6
|
|||
|
Transactions with owners, recorded directly in equity:
|
||||
|
Capital injections converted from loans
|
0.8
|
|||
|
Total contributions by and distributions to owners
|
0.8
|
|||
|
Net parent investment at Sep 30, 2016
|
115.1
|
|||
10. Subsequent events
The sale of HTS Group to Modine was concluded on November 30, 2016. All internal loans / loan receivables from former parent company HTS II AB were settled or converted into equity before closing of the transaction. The related guarantees and pledges were released. All internal hedging arrangements with HTS II AB were also settled before closing.
10